How Could Russia Sanctions Impact You?

KOMPAS.com - French Finance Minister Bruno Le Maire has said the European Union and the United States have launched an "economic war" against Russia, referring to Western sanctions against Moscow that have effectively cut off the country from international financial markets.

The so-called economic war has left Russia facing a financial meltdown with the ruble crashing to record lows against the US dollar, prompting Russians fearing a run on banks to queue up at ATMs in the hopes of withdrawing cash.

However, it's not just Russia feeling the pinch of the Western sanctions, which were unleashed in response to Russian President Vladimir Putin's war against Ukraine. The sanctions are hurting countries from Egypt to Germany, which rely heavily on wheat and natural gas from the parties at war.

Also read: ASEAN, Russia Hold First Joint Naval Exercises Off Coast of Indonesia’s Sumatera 

DW looks at what would the sanctions against Russia mean for people in other countries.

Higher energy prices

Oil and natural gas prices soared after another round of Western sanctionson Russia over the weekend as traders braced for supply disruptions from Russia, one of the world's largest oil and gas exporters, and Ukraine, a major transit country for Russian gas.

So far the sanctions have not targeted the energy sector directly, but traders fear that Moscow could retaliate by restricting oil and gas exports and that Western sanctions could be eventually broadened to directly hurt the Russian energy sector, the country's golden goose.

"Russia's energy supplies are very much at risk, either due to being withheld by Russia as a weapon or swiped off the market due to sanctions," Louise Dickson, oil market analyst at Rystad Energy, said in a note.

Some concerns shutting out major Russian banks from the SWIFT payments system could make buying Russian oil and gas prohibitively cumbersome. European banks Societe Generale and Credit Suisse are reported to have halted financing of all commodities from Russia.

Also read: UN: More Than Half A Million Have Fled Ukraine

That's making many anxious in Europe, which gets more than a third of its gas supply and about a quarter of its oil from Russia. Any disruption in gas supply could leave Europeans without enough gas to heat their homes and with exorbitant electricity bills as utilities would be left scrambling for the fuel to generate power.

"So far sanctions seem to be carving out energy and as such the spillover is less severe than it could be. Make no mistake, the risks of a far worse outcome are there," Deutsche Bank analyst Jim Reid told clients.

Surge in food prices

The crisis has also ramped up fears about supplies of grains such as wheat and corn, and oilseeds. Wheat futures in Chicago have been surging after touching 13-1/2 year highs on Friday, while corn prices are also trading at elevated levels.